Legal Ethics Memorandum of Advice

7/27/2019 Legal Ethics Memorandum of Advice

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MEMORANDUM OF ADVICE

To: Matthew Owen

From: Junior Solicitors Team

Re: Tankard v Oz Farm Supplies Pty Ltd

Date: 25 February 2013

1. Summary of Advice

In Victoria, the doctrine of Legal Professional Privilege has been codified in the Evidence Act2008 (Vic) (hereafter The Act) at Part 3.10, Division 1 as client legal privilege. This Act

mirrors the Evidence Act 1995 (Cth). The Act relates to adducing evidence at trial and notpre-trial matters where common law applies unless abrogated by statute. There has beensome controversy over this division as it essentially means that two sets of law operate in thearea of privilege.

When discussing pre-trial issues, we will review the matter at common law as litigationprivilege, which covers certain communications passing between a client and the clientslawyer or a third party, or the clients lawyer and a third party.1We will also review optionsunder the act if we were to proceed to trial.

The judgment of Ensham Resources Pty Limited v Aioi Insurance Company Limited [2012]FCAFC 191 (Ensham) would support a challenge brought by us against the adequacy of

OFSs privilege claim on the basis that, prima facie, their claim amounts to an excessiveclaim for client legal privilege since what is being withheld is not communication produced forthe dominant purpose of obtaining legal advice, but rather produced for an additionalpurpose and being withheld in order to benefit OFSs position in the legal action by lesseningliability.

2. Summary of facts

Ensham involved an application for leave to appeal from an interlocutory order made whichdismissed the applicants application to inspect documents for which the respondents hadclaimed legal professional privilege. The proceeding related to an insurance claim and losssuffered following the flood of a mine site. Of particular concern was an insurance report and

emails discussing the contents of that report, which detailed the impact of the flood on themine site.

Enshamprovides strong authority against OFSs claim of privilege, not only due to the strongparallel between factual situations, but also because it explores the issue of the indulgencefactor resulting from maximising the prospects of establishing a claim for privilege.2

3. Key issues arising

According to Ensham, when the communication is contained in a document and thedocument is brought into existence for the dominant purpose of anticipated legal

1Esso Australia Resources Limited v Commission of Taxation (1999) 201 CLR 49

2Ensham Resources Pty Limited v Aioi Insurance Company Limited [2012] FCAFC 191 at 12


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proceedings, the document will be subject to legal professional privilege.3The whole of thatreport will be privileged since the document amounts to communication.

Only communication which is prepared for the dominant purpose of providing assistance inrelation to those anticipated proceedings, however, will satisfy this purpose (Esso AustraliaReources Limited v Commission of Taxation of the Commonwealth of Australia (1999) 201CLR 49.4

4. Relevant law

Litigation is reasonably anticipated

Whether or not litigation is reasonably contemplated is a question of fact to be determinedobjectively.5 In determining whether litigation was reasonably anticipated, the subjectiveviews of the parties may well be relevant, but they are not determinative. The question is tobe assessed by reference to all of the surrounding circumstances. 6 There has been nodecision of the High Court as to what reasonably anticipated or reasonably contemplated

means in the context of a claim for legal professional privilege. However, in AustralianCompetition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR526 at 559, Goldberg J stated that:

reasonably anticipated meant that such proceedings will more probably than not becommenced.

7Furthermore, in Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover

Authority (2002) 4 CR 332 is was said that the test was that there must be a real prospect of

litigation, as distinct from a mere possibility, but it does not have to be more likely than not.8It

must be noted that the position of Mitsubishihas been followed by a number of judges in theFull Federal Court and it has also been followed by a judge of the Supreme Court of newSouth Wales in Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380.

It was accepted in Enshamthat this was the case, but interestingly the purpose of litigation

was set-out alongside commentary that the solicitors were indulging in self-servingstatements referring to a potential claim for privilege contained in the email from MrStockdale to Mr Kodaira9 which would support our position as it highlights a disregard forexcessive indulgence in privilege in order to strength a claim or avoid liability.

Dominant Purpose

If the document was created for the purpose of reasonably anticipated litigation, thequestion then becomes whether this purpose is its dominant purpose. Ensham providesauthority that a document will not be privileged if it was not created for the dominant purposeof providing advice in respect of reasonably anticipated litigation.10That is, purposes otherthan for the purpose of obtaining legal advice. Enshamalso provides that regard should bemade to the partys purpose in the creation of the document.

In addressing this issue in Ensham, Buchanan J looked to Hartogen Energy Ltd (in liq) v TheAustralian Gaslight Company (1992) 36 FCR 357, whereby Gummow J stated the purpose



5Grant v Downs (1976) 135 CLR 674 at 692

6Visy Industries Holdings Pty Ltd v Australian Competition and Consumer Commission (2007) 161

FCR 1227Ensham Resources Pty Limited v Aioi Insurance Company Limited [2012] FCAFC 191 at 54

8

Ensham Resources Pty Limited v Aioi Insurance Company Limited [2012] FCAFC 191 at 559Ensham Resources Pty Limited v Aioi Insurance Company Limited [2012] FCAFC 191 at 62



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for which a document is brought into existence is a question of fact. The purpose willordinarily be that of the maker of the document, but this will not always be the case.11

In this respect Buchanan J held it is a matter of fact. His Honour concluded that the reports inquestion were prepared for purposes other than for the purpose of obtaining legal advice.His Honour highlighted that the applicant contended regard should have been made to therespondents purpose in the creation of the reports, as well as the solicitors purpose. In thatrespect it was argued that the insurers commissioning of the reports was for the purpose ofthe insurers setting an estimate on potential liability under the contract of insurance and forconducting their business.12It was therefore held that in such circumstances it could not besaid that the documents were created for the dominant purpose of the respondents obtaininglegal advice.

Power of the court to inspect

Section 133 of The Evidence Act13reads as follows:

If a question arises under this Part relating to a document, the court may order thatthe document be produced to it an may inspect the document for the purpose ofdetermining the question

In the matter of Bailey v Department of Land and Water Conservation14it was made clearthat the court may inspect documents under this section in order to confirm a claim forprivilege. Further to this, it was observed in Esso15that the court should not be hesitant inexercising its power to examine documents.

This section has been relevant in matters where the independence of a practitioner is afactor needing consideration. This is because the documents may not have been producedwhen the practitioner was acting in professional legal capacity and the nature of the

documents may be administrative or managerial. This issue was raised in the matter ofAustralian Hospital Care Pty Ltd v Duggin 16where the General Counsel of AustralianHospital Care was also the company secretary. In this matter, Gillard J held that the plaintiffsfailed to exclude the doubt that General Counsel was acting independently in a professionalcapacity in the communications which were internal memorandums. In Seven Network vNews Limited17, the court was again not convinced that the in-house lawyer was acting in alegal context or role in relation to the documents over which LPP was claimed, becauseChief General Counsel also acted in a variety of roles within the News Group.

5. Application to OFS

Ensham provides strong authority to the matter at hand, not only because of its considerationof dominant purpose, but also because it considers the issue of an indulgence factorresulting from maximising the prospects of estabdlishing a claim for privilege, 18and thepossibility of burying reports produced by third-parties for an additional purpose which maystrengthen a partys claim.



131995 (Cth)14[2009] NSWCA 10015Gleeson CJ, Gaudron and Gummow JJ at 50 [52]

16(No.2 ) [1999] VSC 131 (28 April 1999)17[2005] FCA 14218

Ensham Resources Pty Limited v Aioi Insurance Company Limited [2012] FCAFC 191 at 12


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The facts provide a strong parallel to our matter in that what is attempting to be discovered isa report which lends itself toward providing factual background to the question before thecourts, which would ultimately impact upon the outcome of the matter.

Considering Robin Jones reputation, it is likely that OFS is making an excessive claim forprivilege, which includes illegitimate inclusions, in order to bury evidence that would suggestthat OFS had prior knowledge of damage to the fence. In this respect, we should raise thefollowing objections:

i) The Existence of an Expert Report

Existence of the engineers report is a factual matter to be established. It will be necessary tolead evidence adducing existence. On the information provided, there is a reasonablelikelihood that this report is in existence. If it is shown to exist, it will be necessary to establishthat the engineersreport was not created for the dominant purpose of litigation.19

On the facts, the report is unlikely to be considered to be created for the dominant purpose oflitigation as it was commissioned 3 months after the flooding (which occurred 2 years ago),presumably due to suspected structural damage in the fence. At that stage, there would havebeen no contemplation of litigation. 20 Even if future legal concerns had been a factorcontributing to the commissioning of the engineers survey and report, it is unlikely that OFSwill be able to demonstrate that the dominant purpose for the creation of the report was forthe provision of legal advice or for use in anticipated or contemplated litigation. Rather, thereport was prepared for a number of other key purposes, in particular so that OFS couldobtain an understanding of its premises and any maintenance work required, as a matter ofits ordinary business operations.21Further, there was no litigation on foot when the reportwas made and the report was likely primarily developed in order to engage the extent ofrepair work necessary, including the type of repair work required, likely duration and those

costs associated.

Therefore, the basis of concealing it could only be for the purpose of concealing OFSsnegligence in the matter.

In order to prove the existence of the report and convince the court to compel its production,we could have Matt Rankin swear an affidavit setting out evidence of what he saw, heard orotherwise perceived on the day the engineer visited the premises. However, if Matt were toswear that he believes a report was produced, this is likely to be excluded as opinionevidence.22

According to our instructions, Matt says that he observed two people from head office, one of

which was an engineer. We would need to determine who the other person was. If it was notOFSs in house lawyer, the evidence would support our argument that the engineers expertadvice was not given for the dominant purpose of legal advice or in contemplation oflitigation.

19Esso Australia Resources Ltd v Commissioner of Taxation(1999) 201 CLR 49.

20Esso Australian Resources Ltd v Federal Commissioner of Taxation 2000 168 ALR 123 (ch7 p6).21Powercor Australia Ltd v Perry [2011] VSCA 239.22Evidence Act 2008 (VIC), s76.


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ii) Minutes of board meetings and Peter Gardiners involvement

As the party asserting privilege, OFS must show that the Minutes were communicated to in-house counsel for the dominant purpose of legal advice.23This is not clear cut, becauseGardiner has a dual role as Company Secretary and Inhouse Counsel.24As CompanySecretary, Gardiner would be expected to attend broad meetings and have access to theminutes. Furthermore, the minutes were for general broad meetings, rather than specificmeetings organized to discuss particular matters.. It would therefore be arguable that theMinutes have been obtained in the capacity as Secretary, rather than in-house Counsel.Here consideration should be paid to:

The fact that legal professional privilege will only protect communications between alawyer and client in the course of a professional relationship.

The nature of the relationship collectively. Seven Network Ltd v News Ltd [2005] FCA142provides authority that legal professional privilege will only protectcommunications that are made in the course of a professional relationship between a

lawyer and client, and that individuals may act multiple roles within the course ofemployment.

Whether the Minutes were created for the purpose of anticipated litigation.

iii) Possibility that Peter Gardiner does not hold a practising certificate

If it is established that Peter does not hold a practicing certificate, this may be indicative of alack of independence from the Board, therefore not affording professional privilege on thebasis of legal relationship. In Vance v Air Marshall McCormack (as Chief of Air Force) [2005]ACTA 35 (ch 8 p9) the ACT Court of Appeal held that failure to hold a practicing certificate is

not fatal to a claim for legal privilege but that it is a very relevant fact to take into account inestablishing whether an in-house legal advice such that would attract a claimunder theEvidence Act. Please note, however, this decision is not binding at common law.

This notion of independence was also discussed in Waterford25whereby it was stated a legal

advisor must be independent of the client in order that the personal loyalties, duties or

interests of the adviser should not influence the legal advice which he gives or the fairness of

his conduct of litigation on behalf of his client.

If it is in fact true that Peter Gardener does not hold a relevant practicing certificate then it will

only be considered an issue in the context of his independence and professionalism. If

Matthew raise sufficient doubt in the minds of the court about this professionalism it mayprompt them to inspect the documents as per Section 133 of The Act and the relevant

cases mentioned above. Working as in house counsel and company secretary means that

the independence of Gardener in his legal role is compromised. Therefore it is suggested

that not all the documents to which privilege has been claimed were based on independent

and impartial legal advice and nor do they satisfy the dominant purpose test. The report was

made prior to the accident, and so irrespective of litigation. The minutes from Board meetings

were not made in anticipation of litigation as they too were made before the meeting.

23Esso Australia Resources Ltd v Commissioner of Taxation(1999) 201 CLR 49.24Standard Chartered Bank of Australia Ltd v Antico (1993) 36 NSWLR 87, 91-9325

Waterford v Commonwealth (1987) 163 CLR 54, 70


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6. Conclusion

Based on Ensham and associated case law, I believe we are in a strong position tochallenge the adequacy of OFSs privilege claim, as the facts suggest that thecommunication was not created for the dominant purpose of obtaining legal advice, butrather communication was created for additional purposes and not in anticipation of litigation.Furthermore, OFSs conduct amounts to an excessive claim for privilege, and includes aclaim for illegitimate documents, in an attempt to benefit their legal position by not disclosingall relevant materials, and lessen liability by burying reference to other facts.

If such a claim were to be coupled with a statement from Matt, detailing his understanding ofan existing engineers report, and considering the flood is public knowledge, our challengewould almost certainly be made out.

Signed by: Sarah Poole, Alice Bradshaw, Vanessa Hubel & Winnifred So Mok

Legal Ethics Memorandum of Advice

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